HM Revenue and Customs (HMRC) is now allowing self-assessment customers to apply online for additional support to help spread the cost of their tax bill into monthly payments.
With many in the UK catering equipment supply sector in small companies or self-employed, this move will hopefully help numerous industry people.
The online payment plan service can already be used to set up instalment arrangements for paying tax liabilities up to £10,000. From this month, HMRC has increased the threshold to £30,000 for self-assessment customers, to help ease any potential financial burden they may be experiencing due to the coronavirus pandemic.
The increased self-serve ‘Time to Pay’ limit of £30,000 follows the chancellor of the exchequer’s announcement on 24 September to increase support for businesses and individuals through the uncertain months ahead.
As part of his speech, the chancellor announced that self-assessment customers could pay their deferred payment on account bill from July 2020, any outstanding tax owed for 2019 to 2020 and their first payment on account bill for this current tax year in monthly instalments, up to 12 months, via this self-serve tool. Customers who need longer than 12 months to settle their tax liabilities are invited to contact HMRC in the usual way.
Financial secretary to the treasury, Jesse Norman, said: “We are supporting jobs by giving more breathing space to up to 11m self-assessment taxpayers when managing their tax affairs.
“Enhancing Time to Pay should ease the financial burdens and protect the livelihoods of these taxpayers, as they navigate the months ahead.”
More than 11m people complete a self-assessment tax return each year. Once they have completed their tax return for the 2019 to 2020 tax year, those who have payments to make may have the option of using the online self-serve Time to Pay facility through the government website to set up a direct debit and pay any tax that is owed in monthly instalments, up to a 12-month period.
HMRC estimates around 95% of self-assessment customers who are due to make payments on 31 January 2021 could qualify to implement a Time to Pay arrangement using the self-serve Time to Pay facility online, without needing to speak to an HMRC adviser.
Those who wish to set up their own self-serve Time to Pay arrangements must have no outstanding tax returns, no other tax debts or no other HMRC payment plans set up. The debt needs to be between £32 and £30,000, and the payment plan needs to be set up no later than 60 days after the due date of a debt.
People using self-serve Time to Pay will be required to pay any interest on the tax owed. Interest will be applied to any outstanding balance from 1 February 2021.